How to scale down an extrusion/hole in mesh?
Since you have 'Limit Selection to Visible' enabled, you might not have all the relevant verts selected. 



The selected part seems to be unconnected to the rest of the mesh. 
It also looks like you have another object inside the disc which probably doesn't belong in there.

Ideally your mesh should have only one closed surface and, without sacrificing shape, as little faces as possible if it's for 2nd life.